Samsung Electronics Co. Ltd. in the first quarter overtook Nokia Corp. to become the world’s largest cellphone brand for the first time. However, Samsung remained in second place in the smartphone segment of the cellphone market, behind Apple Inc.

The South Korean electronics giant shipped 92 million cellphones worldwide in the first quarter, compared to 83 million for longtime market leader Nokia.While Samsung’s shipments declined by 13 percent compared to the fourth quarter of 2011, Nokia’s dropped by 27 percent, as presented in Table 1. This allowed Samsung to rise one position to take first place.

In the smartphone segment of the cellphone market, Apple shipped 35 million units in the first quarter, as presented in Table 2. This compares to 32 million for Samsung. Apple remained in the same position in smartphones that it captured in the fourth quarter of 2011 — at No. 1 — while Samsung held on to second place.

Apple’s smartphone shipments declined 5 percent, compared to 11 percent for Samsung. Sequential declines in the shipments of smartphones as well as cellphones reflect normal seasonal patterns in which sales decrease following the peak holiday period in the fourth quarter.

Please note that the shipment information presented in this news flash and the tables present results from cellphone and smartphone brands that have already reported their results for the first calendar quarter of 2012. Brands that haven’t reported yet are not included.

“With cellphones now accounting for more than 40 percent of Samsung’s overall revenue, it’s clear that the company’s continued investments in smartphone hardware and software R&D are paying off,” said Wayne Lam, senior analyst, wireless communications at IHS, in the press release. “The company is not only cashing in on the market’s shift to smartphones, but is also succeeding in other cellphone product categories, allowing it to capture the overall market lead. What makes Samsung’s performance even more impressive is that the company’s latest Galaxy S III handset has yet to be launched, with shipments set to start in May. This indicates Samsung is likely to make further progress in market share in 2012.”

With Samsung taking the leadership position, it will mark the first time since 1998 that Nokia has not been the No. 1 brand in the global cellphone market.

“Samsung’s surpassing of Nokia for cellphone market leadership represents not only a changing of the guard among handset brands but also a fundamental shift in the structure of the wireless market,” said Ian Fogg, senior principal analyst, mobile for IHS, in the press release. “Cellphone market growth is now being generated exclusively by the smartphone segment, and not by the feature phones, entry-level cellphones and ultra-low-cost handsets (ULCH) that had fueled the industry’s expansion over the previous decade.Samsung has successfully ridden the wave of smartphone adoption to attain market leadership. Meanwhile, Nokia is in the midst of transitioning its smartphone strategy, resulting in declining shipments for the company.”

Smartphones are the only segment of the global cellphone business expected to expand in 2012. Global smartphone shipments are set to rise by 35 percent this year, while those for feature phones, entry-level phones and ULCHs will all decline. As a result, the smartphone segment will be single-handedly responsible for the overall cellphone business expansion of 7.4 percent in 2012. Next year, smartphone shipments will rise to account for more than half of all cellphones for the first time, at 52 percent, up from 43.5 percent in 2012.

Smartphones represented 34 percent of Samsung’s handset shipments in the first quarter. In contrast, smartphones accounted for just 14 percent of Nokia’s shipments.

“Samsung is reaping the rewards of strong execution in product design, distribution and marketing,” Fogg noted. “The company has been bold and innovative with handset form factors, featuring differentiated handsets such as the Galaxy Note with its sizable 5-inch display, and a wide range of handsets in every other conceivable screen size.”

Furthermore, Samsung has offered handsets on multiple smartphone operating system platforms, including Google’s Android, Microsoft’s Windows Phone and Samsung’s own bada. By betting on all horses, Samsung is ensuring that it is backing a winner.

Meanwhile, Nokia has placed all its smartphone eggs into one basket: Windows Phone. To make Nokia’s Windows phone strategy pay off, Nokia must convince the leading carriers to visibly back Windows Phone as well as convince consumers of a valuable and differentiated experience.

The Samsung-Apple battle represents the front line in the war between Android and iOS. There are other large established Android original equipment manufacturers (OEM), like HTC Corp., LG Electronics, Sony Corp. and Motorola Mobility Inc., but all of them continue to struggle in the fiercely competitive smartphone market.

For its part, Apple had sold approximately 19 million iPhones in the first quarter of 2011. One year later, the company dramatically increased its shipment volumes by 88 percent to 35 million. And with the share of iPhone shipments shifting away from the United States toward a more international audience, Nokia could be hurt in its core regional markets in Europe and Asia.

Another smartphone player, Research in Motion Ltd., is staking its future performance on the new-generation BlackBerry 10 operating system, due to be shown at BlackBerry World next week, and set to launch later in 2012. RIM’s smartphone shipments declined to 11 million in the first quarter, down 21 percent from 14 million in the fourth quarter.

More info in IHS iSuppli’s report, “Smartphones Making the Grade in 2012,” here.

“With cellphones now accounting for more than 40 percent of Samsung’s overall revenue, it’s clear that the company’s continued copying of smartphone hardware and software R&D are paying off,”
There, corrected.